By 
By Bahle Gama
Eswatini’s leading construction company, Inyatsi Construction, has been selected to spearhead the E1.1 billion Lower Maguduza Hydropower Project—a long-awaited initiative set to transform the nation’s energy sector.
The announcement was made by Middle-Usuthu Hydropower Ltd team leader Richard Gordon during a press conference.This 13.5 MW hydroelectric project marks a significant milestone in Eswatini’s journey toward achieving sustainable energy independence.
The Lower Maguduza Hydropower Scheme is a joint initiative involving the Eswatini Electricity Company (EEC), Middle Lusutfu Hydropower (Pty) Ltd (MLH), and shareholders such as Old Mutual Eswatini. Inyatsi Construction secured the contract through an open tender process, underscoring the company’s capacity and credibility in executing such a critical national project.
Financing and Local Involvement
According to Gordon, over 75 per cent of the E1.1 billion required for the project has been raised domestically. “The financing comprises debt from Standard Bank Eswatini and the Public Service Pensions Fund (PSPF), with equity contributions from Old Mutual via a South African fund. Equity is evenly split between PSPF and Old Mutual,” Gordon explained.
Of the total project cost, Inyatsi Construction is expected to undertake over 75 per cent of the construction work. Gordon commended Inyatsi for securing the contract through a competitive and transparent tendering process.
EEC Managing Director Ernest Mkhonta echoed these sentiments, emphasizing that all companies working on the project were selected through open tenders. “As a public company, EEC is committed to ensuring value for customers by adhering to competitive bidding processes,” Mkhonta stated.
While some of the equipment required for the hydropower facility must be imported due to a lack of local manufacturing capabilities, Mkhonta noted that there would still be significant local involvement.
RELATED:Inyatsi refutes claims of involvement in collapsed road near Nhlangano
“We are grateful that there will be substantial contributions from local contractors, ensuring that Eswatini benefits both directly and indirectly from this project,” he said.
Derrick Shiba, Inyatsi Construction CEO, hailed the award as a significant project and with Inyatsi’s track record of delivering similar projects that are strategic to the national interest, he was confident of the successful completion of the project
Project Overview
The Lower Maguduza Hydropower Scheme is designed to enhance the country’s energy generation capacity by 26 per cent. It is expected to add approximately 67 GWh of renewable electricity per year to the national grid. Construction began on Tuesday, January 7, 2025, and the first power output is anticipated by the end of 2026.
The hydroelectric facility, located on the Lusutfu River near Sidvokodvo, will include several key infrastructure components:
A diversion weir
Substation upgrades
A 2 km, 66kV transmission line
The facility will operate as a mid-merit plant, supplying power during both peak and off-peak demand periods to optimize the use of clean energy.
Agreements and Long-Term Impact
The project is anchored by a 30-year Power Purchase Agreement (PPA) and Direct Agreements between EEC and MLH, an Independent Power Producer (IPP). Under the PPA, electricity generated by the plant will be sold to EEC at an inflation-linked tariff. At the end of the 30-year term, ownership of the hydropower facility will be transferred to EEC at no cost, ensuring long-term national benefits.
The initiative is also expected to significantly contribute to local employment and economic growth. At least 100 local jobs will be created during the construction phase, and over 25 per cent of the construction contracts will involve Eswatini companies. Additionally, local providers will benefit from ongoing service contracts throughout the PPA duration.
“This project represents Eswatini’s first large-scale, privately financed renewable energy initiative. It will reduce dependence on imported, coal-generated electricity and significantly cut carbon emissions. This aligns with national goals to triple renewable energy capacity by 2030 and strengthen climate resilience,” Mkhonta stated.
RELATED:Inyatsi Foundation unveiled as title sponsor of Eswatini Schools Arts and Culture competitions
The Lower Maguduza Hydropower Scheme is poised to usher in a new era for Eswatini’s energy sector, promoting renewable power generation, economic development, and sustainability. These advancements are made possible through innovative financing strategies and strategic public-private partnerships.
Historical Timeline of the Project
The development of the Lower Maguduza Hydropower Scheme has been years in the making, with key milestones achieved along the way:
- 2015 • Concept Development: Initial feasibility studies conducted to assess the potential for a hydropower station on the Lusutfu River near Sidvokodvo.
- 2017 • Preliminary Planning: EEC commissions detailed environmental and technical assessments to evaluate the project’s viability.
- 2018 • Stakeholder Engagement: Consultations with government agencies, local communities, and potential private partners begin to align project objectives with national energy policies and community needs.
- 2020 • Project Design Finalization: Completion of the engineering design phase, outlining critical infrastructure components such as the diversion weir, transmission lines, and substation upgrades.
- 2021 • Regulatory Approvals: Environmental Impact Assessment (EIA) and other regulatory clearances obtained from relevant authorities, paving the way for project execution.
- 2022 • Funding Arrangements: Negotiations with private investors result in Old Mutual being selected as the primary project funder.
- 2023 • PPA Negotiations: EEC and MLH finalize terms for a long-term PPA, ensuring electricity sales to EEC at an inflation-linked tariff.
- October 25, 2024 • Contract Signing Ceremony: Landmark agreements signed between EEC and Old Mutual at Eluvatsini House, Mbabane, marking the project’s formal commencement.
- Early 2025 • Start of Construction: Earthworks and major construction activities begin at the Lower Maguduza site, employing over 100 local workers.
- 2026 (Projected) • Commissioning of First Unit: The first unit of the hydropower station becomes operational, contributing to the national grid by late 2026.
- 2027 (Projected) • Full Operational Capacity: The hydropower station reaches full capacity, supporting Eswatini’s renewable energy targets and reducing reliance on coal-based imports.
- End of PPA Term • Transfer of Ownership: Upon conclusion of the PPA, ownership of the Lower Maguduza Hydropower Station is transferred to EEC at no additional cost, securing long-term benefits for the nation’s energy infrastructure.
The Lower Maguduza Hydropower Project stands as a beacon of progress for Eswatini, showcasing the potential of renewable energy to drive economic growth and environmental sustainability. With Inyatsi Construction at the helm and robust public-private collaboration, the initiative promises to enhance local energy security, create jobs, and reduce the country’s carbon footprint. As Eswatini takes this transformative step, the Lower Maguduza Hydropower Scheme is set to become a cornerstone of the nation’s energy future.
